Source: http://mssparky.com/2011/07/anham-llc-accused-of-outrageous-overbilling-in-iraq/all/1/
Anham, Dubai Firm Overbilled Pentagon $900 for $7 Switch, Bowen Says
By David Lerman and Tony Capaccio – Jul 29, 2011 9:01 PM PT
A U.S. contractor in Iraq overbilled the Pentagon by at least $4.4
million for spare parts and equipment, including $900 for an electronic
control switch valued at $7.05, according to a new audit.
Based on the questionable costs identified in a $300 million contract with Dubai-based
Anham LLC,
the U.S. should review all its contracts with the company in Iraq and
Afghanistan, which total about $3.9 billion, said Special Inspector
General For Iraq Reconstruction Stuart Bowen.
“The audit found weak oversight in multiple areas that left the
government vulnerable to improper overcharges,” Bowen wrote in the
forward to his 30th quarterly report, released today. The contract in
question was funded with a combination of money earmarked for Iraqi
Security Forces and Army operations and maintenance funds.
Among the “egregious examples of overbilling” by Anham were $4,500
for a circuit breaker valued at $183.30, $3,000 for a $94.47 circuit
breaker and $80 for a small segment of drain pipe valued at $1.41.
Bowen’s office called for an in-depth review of the entire contract
after discovering “significant weaknesses” in government oversight,
questionable competition practices and possible undisclosed ownership
affiliations between Anham and some of its subcontractors.
Anham officials didn’t immediately respond to a phone call to its headquarters office or an e-mail seeking comment.
Development Spending
Bowen’s latest tally of spending shows that six months before the
remaining 46,000 U.S. combat troops are scheduled to leave Iraq, the
Pentagon, State Department and U.S. Agency for International
Development, since the Iraq war began, had executed 34,728 contracting
actions or grants totaling $35.9 billion.
The special inspector general, created to serve as a watchdog over
U.S. reconstruction aid in Iraq, questioned almost 39 percent, or $4.4
million, of the $11.4 million in contract costs it reviewed.
Those costs, it said, “appear to be not fair and reasonable or were not properly documented.”
In one case,
Pioneer Iraqi Trading Company, an Anham subcontractor, charged the U.S. $900 for a water level control switch that a competitor had offered for $7.05.
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Undisclosed Ties
A member of the family group that owns, through a subsidiary, 50
percent of Anham also owns a 90 percent share in Pioneer, though this
relationship was never disclosed to the Defense Contract Management
Agency, which oversees military contracts, Bowen’s office found.
“The lack of transparency regarding the relationship between Anham
and its subcontractors calls into question whether Anham used due
diligence to ensure that the U.S. government received a fair price for
the goods and services it purchased,” the inspector general’s report
concluded.
In other cases, Anham used subcontractors to purchase items that
could have been bought directly from the manufacturer at lower prices,
the report said.
When Anham was asked to buy a loudspeaker system to alert warehouse
employees of any danger, it chose not to buy the system directly from
the manufacturer at the retail price of $44,615, the report said.
$20,000 Setup
Instead, Anham sought bids from subcontractors and paid a company
called Knowlogy $90,908. That price included $20,000 for installation,
even though the system setup meant little more than wheeling it into
place and plugging it in.
Privately held Anham LLC is a contracting firm for projects
throughout the Middle East, Asia, Europe, and North Africa. It provides
vehicle, transportation, construction, facilities management,
procurement, food, power generation, health management, surveillance and
training services.
Based on all the questionable costs it found, the special inspector
general “believes that all costs under this contract should be carefully
examined, as well as all contracts awarded to Anham,” the report said.
The U.S. military awarded Anham in September 2007 the Iraq contract,
with a ceiling price of $300 million to operate and maintain two
warehouse and distribution facilities in Abu Ghraib and Umm Qasr, Iraq.
The contract, at its conclusion, had obligations of $119.1 million,
of which at least $55 million was spent by subcontractors, the report
said.
The contract was structured on a “cost-plus” basis, meaning the
government must reimburse Anham for all its costs, instead of agreeing
to a fixed price.
The Central Command Joint Theater Support Contracting Command, which
awarded the contract, partially agreed with Bowen’s recommendations. The
Defense Contract Management Agency agreed to perform a new review of
Anham’s purchasing system. (click
HERE for the original article)